Delinquencies in 2W segment rise substantially in September: CRIF Highmark

The asset quality of lenders in the two-wheeler portfolio has deteriorated substantially, with September 2024 registering the highest portfolio at risk (PAR) in the 31-180 days past due (DPD) segment in the last six quarters, driven by the top 11-20 lenders, according to a report by CRIF Highmark.

According to CRIF data, delinquencies in the 31-180 DPD category increased to 5.8 per cent in September 2024, up from 5.1 per cent in June 2024. The DPD rate for the top 11-20 lenders in the category rose to 8.6 per cent from 6.8 per cent, while the top 1-10 lenders’ delinquency rose to 5 per cent from 4.5 per cent in June 2024.

The report also noted that the highest delinquency in the 31-180 DPD category was for loans with a ticket size of Rs 75,000 to Rs 1 lakh.

“…while the market is expanding, deterioration is observed in asset quality, with September 2024 registering the highest PAR 31-180 DPD in the last six quarters, driven by the top 11-20 lenders. The top 21-30 lenders perform well in PAR 31-90 per cent; however, static delinquency, indicating early risk of recent originations, is relatively on the higher side,” the report said.

Delinquency in the 31-90 DPD category increased to 4 per cent in September 2024, up from 3.3 per cent in September 2023. Delinquency in the 91-180 days period rose to 2 per cent from 1.8 per cent, while the 180+ DPD increased to 4.2 per cent from 4.1 per cent last year.

Additionally, after a slowdown in FY24, the value of two-wheeler loan originations rebounded in the first half of FY25 (H1FY25) by 20 per cent year-on-year (Y-o-Y) to Rs 48,935 crore. Meanwhile, there is also a shift towards higher ticket sizes of Rs 75,000 and above and deeper geographies by these lenders.

The report said that higher delinquencies in the early stages hint at a need for better risk management and monitoring, mainly in rapidly growing states and districts. States like Bihar, Madhya Pradesh, Rajasthan, Odisha, and Haryana have witnessed increased PAR despite high loan growth.

"At the district level, Indore, Jaipur, Nagpur, and Aurangabad show deteriorating asset quality despite strong portfolio growth. The Rs 75,000-Rs 1 lakh loan segment exhibits the highest early demise across lender cohorts and regions," the report added.

Source: BUSINESS STANDARD, 25th February, Mumbai